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Assignment of Lease and Subleasing | Real Estate Exam Prep Videos - YouTube
Channel: The Real Estate Classroom
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everybody my name is Paul the Chesky and
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welcome to the real estate classroom
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YouTube channel real quick give this
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video a thumbs up hit that red subscribe
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button and hit that little notification
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bell now two concepts we're going to
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talk about in this video is subleasing
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or sometimes called subletting and
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assignment of leases now a couple of
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things before we get going
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remember all real estate contracts can
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be assigned unless the contracts
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strictly prohibits it so absent some
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kind of prohibition every every real
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estate contract including a lease
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contract can be assigned so I'm going to
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explain the differences between
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assignment of a lease and subleasing so
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check this out so in a typical
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landlord-tenant relationship we have two
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parties we have the lessor and the
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lessor is the landlord and there's a
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lease agreement that's entered into with
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the lessee le SS EE that is the tenant
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all right so let's say it's a one-year
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lease and it's 500 bucks a month and
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this is a single-family house now it
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doesn't matter what type of contract it
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or what type of property it can be a
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single-family home an apartment a
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commercial space it doesn't matter
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conceptually it's all the same so this
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is a one-year lease to two months into
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that one-year lease the tenant decides
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they want to move and they found a
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friend of theirs that wants to take the
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lease over so what's going to happen is
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the tenant is going to do one of two
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things if the lease agreement strictly
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prohibits it
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the tenant may go to the landlord and
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get written permission to do it or in
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the case where the the lease agreement
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doesn't have any kind of prohibition
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then the tenant is free to do it now
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remember the relationship here here are
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the league
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terms in this relationship between the
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Landlord and Tenant the landlord is the
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lessor with an O R and the tenant is the
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lessee all right now at the point that
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the tenant wants to assign the lease
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agreement over to somebody else the
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relationships change and so do the legal
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names all right so the tenant wants to
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assign the lease agreement over to one
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of their friends so the tenant becomes
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what's called the assign or assi GN o r
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and the person that's receiving the
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assigned lease agreement is the you
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guessed it assign e with two E's all
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right so the relationship between these
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two is called the assign or the assignee
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but this relationship between the
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Landlord and Tenant still exists which
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becomes the the lessor letter which is
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the lessor and lessee right that's why I
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drew this the way it is now here's the
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deal the original term of this lease
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agreement was one year for 500 bucks a
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month so on and so forth so let's say
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that it's Tom that is receiving the
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assignment so the tenant is going to
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assign the lease over to Tom Tom still
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must abide by all the terms of the
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original lease agreements so it's still
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going to be for the remaining one the
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balance of the one year it's going to be
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500 bucks a month and all the other
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rules and recs in fact Tom is more than
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likely going to pay monthly rent to the
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landlord it can go through the tenant
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but typically it doesn't it kind of
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depends on how the assignment is set up
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so you have to know for the real estate
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licensing exam who the parties are
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landlord tenant or lessor lessee but at
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the time that the assignment happens
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then the tenant is legally known as the
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assign or and tom is the assignee now
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let's talk about the same scenario but
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we're doing subleasing here now it's a
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different beast all right so we have the
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the landlord which is the lessor
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and they have a relation or a contract
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lease agreement with the lessee with two
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E's now what happens instead of the
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tenant assigning the contract the tenant
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becomes the landlord so what happens as
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the tenant becomes what's called the sub
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lessor oh are less or because they are a
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subtenant or a sub landlord and they
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turn around and rent the property out to
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what's called a sub tenant or a sub
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lessee all right so here's how this
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works
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the landlord rents the property out it's
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a one-year lease agreement at $500 per
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month but the tenant says hey I think I
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can I think this properties under rented
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I think I can make a couple of hundred
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extra dollars a month so the tenant
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finds a tenant and then says hey I'll
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move out you can move in but guess what
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the rent is seven hundred dollars a
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month so the sub tenant is going to pay
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the original ten at seven hundred
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dollars a month and then the original
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tenants going to pay the landlord five
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hundred dollars a month so the tenants
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going to make two hundred bucks a month
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extra that's how that one works now
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here's the interesting thing that if the
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sub tenant stops paying the rent just
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like in our assignment the the tenant
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the original tenant is still responsible
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for all the terms and conditions of that
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original of that original lease
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agreement even though they have a
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separate lease agreement here they're
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still bound by it so if this particular
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tenant stops paying the rent and an
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eviction has to happen the landlord
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actually has to evict both of them it
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can be very complicated legally now up
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here Tom as I said has has to abide by
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the original terms of the contract and
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the same would
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that if somebody stops paying the rent
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here then the the landlord's gonna evict
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both of them the thing to remember is
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the process how it all works and you
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have to understand who is who who is who
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here as far as their legal names go all
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right that's all I have for today's
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video
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you are still studying hit that video
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right there and if you haven't
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subscribed to the channel do me a favor
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click little circle to my left I would
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appreciate it I will see you in the next
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video
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